The Countercyclical Asset, part II

During a recent book interview, an ABC news anchor asked me what kind of impact the real world’s subprime mortgage crisis and related fallout would have on Second Life’s economy. I speculated that it would probably provide an ironic boost, noting how the last recession of 2003 was important to Second Life’s early growth. "I can’t tell you how many people I met then," I told her, "who were out-of-work programmers and web designers creating content in SL while they looked for jobs."

That was an off-the-cuff answer, but the latest economic figures from Linden Lab suggest a similar pattern may indeed be happening now. In-world spending activity has been increasing steadily since the mid-2007 prohibition against virtual gambling. "The Second Life economy," Zee Linden noted, "does not appear to be affected by the slowing economy of the United States." SL blogger Roland Legrand took a look at the numbers, and had a similar thought to me: "Could it be that people find refuge from the ‘real world’ troubles in virtual worlds and that the SL economy ‘profits’ in that way from the crisis?"

I was of the impression that Second Life had jumped the shark and its economy was closely tracking the Bakersfield housing market.

RobApril 24, 2008 at 9:15 am

Could the causation be the other way around? More time on half life means less time working and shopping. Perhaps second life is the cause of the recession?

Andrew EdwardsApril 24, 2008 at 9:11 pm

Here we go. Answered my own question. Only 35% of players are in the United States. Europe represents the bulk of non-US players. So the value of Linden Dollars actually declined against the real-world currency of a pretty large player group.